Landscape-Level Feedbacks in the Demand for Transgenic Pesticidal Corn in T the Philippines ⁎ Zachary S
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Ecological Economics 180 (2021) 106883 Contents lists available at ScienceDirect Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon Landscape-level feedbacks in the demand for transgenic pesticidal corn in T the Philippines ⁎ Zachary S. Browna,b, , Lawson Connorc, Roderick M. Rejesusa, Jose M. Yorobe Jrd a Department of Agricultural & Resource Economics, North Carolina State University, United States of America b Genetic Engineering & Society Center, North Carolina State University, United States of America c Department of Agricultural Economics and Agribusiness, Louisiana State University, United States of America d University of the Philippines at Los Baños, Philippines ARTICLE INFO ABSTRACT JEL codes: We introduce a novel econometric approach to estimate economic pest control feedbacks within agroecological C33 systems, using discrete choice endogenous sorting models. We apply this approach to deployment of transgenic C35 Bt maize in the Philippines. We show with basic theory how areawide pest suppression from largescale Bt maize C36 deployment attenuates farmers' demand for this technology. Econometric results support this hypothesis and D24 imply long-run demand for the Bt trait is price-inelastic, contrasting with price-elastic demand estimated from a Q12 model without feedback. Investigating whether this feedback truly derives from areawide pest suppression, we Q57 analyze farmers' pest infestation expectations and find expected damages are significantly reduced by higher Keywords: areawide Bt deployment. We discuss implications of these findings and other potential applications of the Agroecology econometric approach to study coupled biological and economic systems. Bioeconomic feedbacks Areawide pest suppression Crop choice Discrete choice models Endogenous sorting 1. Introduction genetic composition (e.g. pesticide resistance) of pest populations (Gould et al. 2018). Largescale agricultural production involves ecological feedbacks Theoretical and simulation-based models in biology and economics between farmer decisions, their effects on biological systems, and suggest that externalities resulting from such agroecological feedbacks economic reactions to these effects. The control of crop pests provides a would impact farmers' incentives and decisions to undertake pest con- particularly salient example. Credible estimates put global crop losses trol efforts (Milne et al. 2015; Epanchin-Niell and Wilen 2015). How- due to pests at roughly a quarter of potential yields (Oerke 2006; ever, no empirical research has yet investigated whether this is the case. Culliney 2014), with pest damages expected to increase with climate This is at least partly due to the difficulty of such an exercise. The change (Deutsch et al. 2018). Pest control choices strongly influence econometric measurement of such feedback loops would require lar- economic returns from crop production (Fernandez-Cornejo et al. 2014; gescale, landscape-level experiments or – barring these – some strategy Chambers et al. 2010). A growing body of entomological and weed to address endogeneity. Moreover, directly observing the interactions science research shows how these choices can impose externalities on between farmers and pest populations requires biological and economic neighboring farms, by altering landscape-level pest pressure (Hutchison data with enough detail and variation at both the farm and landscape et al., 2010; Wan et al. 2012; Dively et al. 2018),1 background presence scales. and movement of chemical pesticides (Werle et al. 2018), and the In this paper we introduce a novel approach to econometrically ⁎ Corresponding author at: 4310 Nelson Hall, 2801 Founders Drive, Raleigh, NC 27607, United States of America. E-mail address: [email protected] (Z.S. Brown). 1 Certain pest control choices (like use of transgenic Bt crops) not only alter landscape-level pest pressure for the primary (e.g., target) pest, but these choices can also alter landscape-level pest pressure for secondary (e.g., non-target) pests. For example, one would generally expect that landscape-level pest pressure for the primary pest would decrease with Bt corn and then landscape-level pest pressure for the secondary pest (not susceptible to the Bt toxin) may increase (Kuosmanen et al. 2006; Catarino et al. 2015). https://doi.org/10.1016/j.ecolecon.2020.106883 Received 31 December 2019; Received in revised form 6 October 2020; Accepted 7 October 2020 0921-8009/ © 2020 Elsevier B.V. All rights reserved. Z.S. Brown, et al. Ecological Economics 180 (2021) 106883 measure the effect of bioeconomic pest control feedbacks on agents' systems is the Asian corn borer (Ostrinia furnicalis, or ACB). Bt varieties choices, by using endogenous sorting models developed in the en- are also highly effective at suppressing ACB (Afidchao et al. 2013). vironmental, resource and urban economics literatures (Bayer and We first estimate an endogenous sorting model for Philippine maize Timmins 2007; Timmins and Murdock 2007; Hicks et al. 2012; farmers' decisions to deploy Bt versus non-Bt varieties, using a two- Bernasco et al. 2017).2 These tools have been specifically developed to stage fixed effects conditional logit and instrumental variables regres- measure how the choices of individual economic agents depend on the sion method originally developed by Bayer and Timmins (2007). The market-level, aggregate demand shares for discrete alternatives, and in results from our estimation confirm the prediction of our conceptual turn how these endogenous choices feed back into determining ag- model: Greater areawide adoption of Bt varieties appears to attenuate gregate demand. For example, demand for recreation areas is likely to individual demand for them. As noted above, in qualitive terms, the attenuate with increased congestion (Timmins and Murdock 2007). The endogeneity appears to generate price-inelastic long-run demand for key analogue we use here is the hypothesis, based on previous agroe- the Bt trait. To corroborate the bioeconomic explanation for this result, cological research, that demand for a specific pest control technology – we then econometrically analyze survey data on farmers' expectations genetically modified Bacillus thuringiensis (Bt) maize – should attenuate regarding ACB infestations, to see whether higher areawide Bt de- due to landscape-level pest pressure reductions induced by the tech- ployment leads farmers to expect fewer infestations. We find robust nology. evidence for this effect. The general identification strategy used in endogenous sorting The rest of the paper proceeds as follows: We first present a con- models is to observe variation in the effective choice set available ceptual model of pest suppression spillovers and feedbacks in the de- within each market. Such variation can be used to build an instrument mand for Bt maize, followed by a detailed description of our econo- that predicts variation in aggregate demand shares, but is exogenous metric approach. We then provide a description of the empirical context with respect to unobserved market-level factors that affect individual and the dataset used in the study, before discussing some econometric preferences and thereby aggregate demand. For example, recreation considerations (vis-a-vis our data). Estimation results are then pre- site openings or closures – or more generally changes in the relative sented and interpreted. We then discuss implications and limitations of costs of access or nonmonetary attributes – over time produces varia- our analysis. tion in the effective recreation choice set available at a given interval of time (Timmins and Murdock 2007). To the extent this variation is 2. Conceptual and Econometric Models exogenously determined (i.e. not itself a product of congestion), it can be used to infer how congestion attenuates demand. We first present a conceptual model of how we can expect area-level To apply this approach in measuring the bioeconomic pest control adoption of a pesticidal crop to determine pest densities (the bioeco- feedbacks, we first present a simple conceptual model showing how an nomic spillover), and in turn determine individual grower choices analogous feedback should manifest in the case of Bt maize, given about whether to adopt GM varieties. While our model makes a number reasonable – and testable – assumptions about agents' pest damage of simplifications, in the following section describing the study area, we expectations. In this model, greater areawide adoption of Bt maize re- argue that it characterizes well, the typical insect pest control en- duces landscape-level pest pressure, thereby reducing the incentive for vironment facing a Philippine maize farmer over the time period in our individual farmers in the area to deploy the control measure. One data. We then translate this conceptual model into an econometric practical consequence of recognizing this bioeconomic feedback is that approach, and describe the estimation procedure. the long-run, equilibrating price elasticity of demand for the pest con- trol measure should therefore be less than what would be erroneously 2.1. Conceptual Model implied by ignoring it. Our empirical estimates in fact suggest demand for the Bt trait switches from being price-elastic to inelastic when ac- Consider a farmer facing the ex ante binary choice of whether to counting for this endogeneity. plant one of two varieties of a crop: a conventional variety fully sus- Motivated by this theory, we then specify and estimate